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Paid search down?

Search marketing has held up remarkably well during the recession. But can it last?

According to Hitwise, there are signs of weakness. In the four weeks leading up to May 9, it observed that 7.25% of search engine traffic in all categories of sites it monitors came from paid clicks.

That's a 26% decline from the same period a year prior.

In a post on the Hitwise blog, Heather Hopkins says that the trend was noticeable across almost every individual category:

This trend is apparent across 16 of the 17 Hitwise parent categories (i.e. Automotive, Food and Beverage, Health and Medical, etc).

She went on to state that "The steady and consistent decline across categories indicates that this is not an isolated or seasonal variance".

Hardest hit: brand name keywords. Cited as an extreme example: Home Depot. During the four week period tracked, only .83% of searches for "Home Depot" in 2009 came from paid clicks; that compares to 28.88% in 2008.

Obviously it's easy to blame these declines on the recession and slimmer marketing budgets. But as Andy Beal at MarketingPilgrim points out, brands may also be getting smarter about organic vs. paid search. Referring to the decline in paid clicks for the brand keywords, Beal asks:

Is that likely due to a reduction in spend, or Orbitz et al figuring out that they really don’t need to spend so much on paid advertising–considering they’re #1 in the organic results?

Bingo.

Ironically, one has to wonder if the reported boost Google has given to brand websites could contribute to the declines Hitwise is seeing. After all, if those brands see more (free) organic traffic from Google, they'd have good reason to ease up on paid campaigns.

Whatever the case may be, paid search isn't going anywhere and it's inevitable that the landscape will change as market conditions change and as search marketers become more skilled in balancing organic SEO efforts and paid search to maximize ROI.

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Comments (3)

Certainly advertising budgets have been slashed across corporate America which is in part responsible for the overall decline.

Outside of corporate budget woes Lead Discovery has seen a huge increase in dishonest advertising. From "free grants" to "Google Cash" to straight up lies for Credit Card and Foreclosure relief. This reality has been supported in many conversations I have had with my peers in the lead generation space.

It's an easy game for dishonest marketers to succeed at. If you publish a completely sensational and dishonest text ad it will be clicked on more often than its comparatively boring and honest neighbors. This results in a high CTR on networks like Adwords, Yahoo and Adcenter as well as a lower CPC. And if they lie on their ads there is little doubt their landing pages are just as misleading. Unfortunately, Google and the like will not monitor nor punish deceptive advertising. I don't believe they are ignoring it simply to make more money, but instead they are pushing it off because it is a slippery slope to making them a de facto arbiter of what is false and deceptive advertising. Or putting them in a position to have to legally defend each and every business they approve to run ads on their network. Leave that to the FTC they say.

In the mean time, companies like ours are getting penalized for telling the truth and putting forth honest marketing campaigns. Slowly we have pulled out of the CTR based PPC space opting for other methods of advertising where we can pay for placement, or have a longer ad to distinguish our marketing message from the scammers.

The economy may be having a significant impact on overall online ad spend, however deceptive advertising, click fraud and trademark infringement will continue to erode marketer's confidence in SEM until the SE's muster up the courage to take action against it.

almost 9 years ago

Alonzo Carlos

Better get back to reading your studies and speaking with people in the paid search space - paid search on brands has been beneficial in every study conducted thus far and in many "in house" tests. You continue to do something as long as you make money at it, at least that's what we do here.

We've found over the last 12 months or so that paid search's ROI for us has dropped away. To the point now where we've pretty much stopped doing it.

Exactly the same creatives, bid approaches, landing pages/destination content etc. has been delivering steadily declining ROI. This could be something to do with us, it could be improved competition, or just maybe it's because our customers (or, at least, the genuine prospects who convert) are becoming 'savvier' about paid search ads and are choosing to ignore them or don't 'trust' them as much.

If it were true that searchers are becoming accustomed to 'down-weighting' the trust they place in paid search ads (because they're starting to understand that they are ads?) then this would be significant, and bad, news for Google. It's not something I've heard about, though must be something Google would know (and likely choose not to publish!), but I'm wondering if others are finding their paid search ROI declining as much as we have seen?

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